Helia Group Limited · ASX:HLI
Helia — Genworth Mortgage Insurance Australia — 3Q 2016 Earnings Presentation
24 slides from Helia's earnings presentation, Nov 4, 2016
Slide 1: Genworth Mortgage Insurance Australia 3Q 2016 Financial Results Presentation
Genworth Mortgage Insurance Australia 3Q 2016 Financial Results Presentation 4 November 2016 ©2016 Genworth Mortgage Insurance Australia Limited. All rights reserved.
Slide 2: Disclaimer
Disclaimer This presentation contains general information in summary form which is current as at 30 September 2016. It may present financial information on both a statutory basis (prepared in accordance with Australian accounting standards which comply with International Financial Reporting Standard
Slide 3: Introduction
Introduction Georgette Nicholas, CEO
Slide 4: 3Q 2016 and YTD financial results summary
3Q 2016 and YTD financial results summary (A$ millions) 3Q15 3Q16 Change % 3Q result in line with expectations Gross written premium 124.7 92.5 (25.8%) • High LVR segment impacted by reduced lender risk Net earned premium 123.9 115.9 (6.5%) appetite. Reported net profit after tax 65.5 46.7 (28.7%) •
Slide 5: Genworth value proposition
Genworth value proposition Innovation and technology will underpin Genworth’s value proposition Market & regulatory changes Genworth value proposition • Changing credit cycle • Customer focused • New and refined bank capital • Risk management partner requirements • Mortgage market insights • Tighter
Slide 6: Residential mortgage lending market
Residential mortgage lending market Originations and HLVR penetration1 $ bn 37% 34% 33% 31% 31% 27% 27% 24% 22% 371 335 37 300 40 51 262 256 40 240 242 49 219 46 36 41 26 31 41 43 180 43 47 50 200 15 40 166 25 139 102 99 98 111 74 95 65 71 68 63 66 80 80 83 45 2 2008 2009 2010 2011 2012 2013 2014 20
Slide 7: Macroeconomic conditions
Macroeconomic conditions Delinquency rates of geography Unemployment rates (seasonally adjusted) Change Change State Sep 15 Sep 16 State Sep 15 Sep 16 (basis points) (basis points) New South Wales 0.30% 0.32% 2 bps New South Wales 5.8% 4.9% (9 bps) Victoria 0.35% 0.39% 4 bps Victoria 6.2% 5.7% (5 bp
Slide 8: Detailed financial performance
Detailed financial performance Luke Oxenham, CFO
Slide 9: 3Q 2016 income statement
3Q 2016 income statement (A$ millions) 3Q15 3Q16 Change Gross written premium 124.7 92.5 (25.8%) Movement in unearned premium 19.2 40.7 112.0% Gross earned premium 143.9 133.2 (7.4%) Outwards reinsurance expense (20.0) (17.3) (13.5%) Net earned premium 123.9 115.9 (6.5%) Net claims incurred (41.5) (
Slide 10: New insurance written
New insurance written NIW1 by original LVR2 band NIW1 by product type $ bn, % $ bn, % 87% 86% 85% 85% 84% 83% 10.5 82% 10.5 23% 8.5 8.5 7.8 7.2 7.8 20% 7.2 6.4 6.2 16% 6.1 6.4 6.2 6.1 29% 44% 22% 17% 18% 49% 46% 99.4% 99.2% 99.1% 50% 56% 99.1% 57% 56% 99.0% 99.3% 99.2% 33% 38% 31% 33% 14% 22% 26% 1Q
Slide 11: Gross written premium
Gross written premium GWP and average price of flow business GWP walk $ m, %Copy Body $ m Copy Body •2.0%Bullet 1 • Bullet 1 1.77% 1.78% ‒ Bullet 2 ‒ Bullet 2 1.53% 1.57% 1.57% 124.7 3.1 (35.3) 157.63 Bullet 1.42% 1.48% Bullet 3 1.5% Subtitle 127.71 124.7 Subtitle 1 (0.1) 92.5 104.8 1.0% 97.5 Su
Slide 12: Net incurred claims
Net incurred claims (A$ millions unless otherwise stated) 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 Number of paid claims (#) 280 288 325 291 280 286 321 Average paid claim1 ($’000) 62.5 66.9 65.9 71.0 65.8 79.2 73.3 Claims paid1 17.5 19.3 21.4 20.6 18.4 22.7 23.5 Movement in borrower recovery receivable o
Slide 13: 3Q 2016 regulatory capital position
3Q 2016 regulatory capital position (A$ in millions) 31 Dec 15 30 Sep 16 NIW by original LVR band and Probable Maximum Loss Capital Base $ bn Common Equity Tier 1 Capital 2,351.2 1,990.9 2.60 2.59 Tier 2 Capital 249.6 200.0 2.51 Regulatory Capital Base 2,600.8 2,190.9 Capital Requirement 2.36 2.36 2
Slide 14: Summary and conclusion
Summary and conclusion Georgette Nicholas, CEO
Slide 15: 2016 outlook
2016 outlook Overall conditions are favourable despite pressure from some regional areas • Australian economic conditions overall remain stable, though there are areas of pressure. Low unemployment rates and record-low interest rates are supporting serviceability and a continued focus by regulators
Slide 16: Questions
Questions Georgette Nicholas, CEO Luke Oxenham, CFO
Slide 17: Supplementary slides
Supplementary slides x Genworth %,<.
Slide 18: Residential mortgage lending market
Residential mortgage lending market Investment vs. owner-occupied (APRA statistics)1 Investment vs. owner-occupied3 (Genworth) $ bn, % $ bn, % 40% 37% 30% 36% 34% 33% 27% 32% 33% 31% 24% 25% 29% 23% 23% 21% 20% 20% 136 136 109 76 84 8.7 81 78 12.5 68 6.7 8.0 8.6 60 8.4 6.2 5.2 235 187 191 200 33.0 4
Slide 19: Insurance in force and New insurance written
Insurance in force and New insurance written Insurance in force (IIF)1 by original LVR2 band, as at 30 September 2016 IIF1 by product type, as at 30 September 2016 Total IIF $323bn Low HomeBuyer Plus 95.01%+ 60.01-70% Doc 3% Other 2% 6% 5% 1% <60% 8% 90.01-95% 29% 70.01-80% 17% 85.01-90% Standard 80
Slide 20: Insurance ratio analysis
Insurance ratio analysis Expenses Combined ratio $ m, % $ m, % 71.1% 64.0% 27.3% 59.2% 26.0% 25.7% 25.7% 25.2% 25.8% 53.4% 50.5% 23.4% 43.9% 43.5% 82.4 73.4 73.8 30.3 31.9 30.9 29.9 29.1 29.9 61.4 26.6 57.3 29.9 52.2 29.1 48.7 31.9 17.5 16.9 17.1 17.0 16.4 29.9 14.5 15.9 26.6 30.3 30.9 52.5 41.5 44.
Slide 21: Delinquency development
Delinquency development Favourable performance post 2009 1.40% 2005 2006 1.20% 2007 2008 2009 1.00% 2010 2011 2012 Delinquency rate (%) 0.80% 2013 2014 2015 0.60% 2016 0.53% 0.46% 0.48% 0.40% 0.35% 0.44% 0.42% 0.31% 0.30% 0.19% 0.20% 0.14% 0.01% 0.13% 0.00% 103 109 115 121 127 133 139 145 151 157 13
Slide 22: Delinquency development
Delinquency development Quarterly delinquency roll and delinquency composition Delinquency roll 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 Opening balance 4,953 5,378 5,900 5,804 5,552 5,889 6,413 New delinquencies 2,679 3,103 2,782 2,401 2,697 3,215 3,214 Cures (1,974) (2,293) (2,553) (2,362) (2,080) (2,40
Slide 23: Balance sheet and unearned premium reserve
Balance sheet and unearned premium reserve Strong balance sheet with $3.6bn in cash and investments and $1.2bn in UPR Balance sheet as at 30 September 2016 Unearned premium by year as at 30 Sept 2016 (A$ in millions) 31 Dec 15 30 Sep 16 Assets Total UPR $1.2bn Cash and cash equivalents 78.1 49.0 Inv
Slide 24: Income statement reconciliation
Income statement reconciliation Reconciling to the US GAAP figures reported by Genworth Financial, Inc. Walk from US GAAP AUS segment results to Quarterly Less Quarterly AUD Adjustments Total Genworth AIFRS Genworth Consolidated Income Statement supplement non - supplement equivalent adjustments gro
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